Orange Corp. has two divisions: Fruit and Flower. The following information for the past year is available for each division:

	Fruit Division			Flower Division
Sales revenue	$	600,000		$	900,000
Cost of goods sold and operating expenses		450,000			600,000
Net operating income	$	150,000		$	300,000
Average invested assets	$	1,200,000		$	1,600,000

Orange has established a hurdle rate of 12 percent.

Required:

1-a. Compute each divisions return on investment (ROI) and residual income for last year.

1-b. Determine which manager seems to be performing better.

2. Suppose Orange is investing in new technology that will increase each divisions operating income by $144,000. The total investment required is $1,600,000, which will be split evenly between the two divisions. Calculate the ROI and residual income for each division after the investment is made.

3. Determine whether both managers will support the investment.

Req 1A Req 1B Req 2 Req 3 Compute each division's return on investment (ROI) and residual incon percentage rounded to two decimal places, (i.e., 0.1234 should be ent Fruit Division Flower Division ROI % % Residual Income (Loss) Req 1A Req 1B Req 2 Req 3 Determine which manager seems to be performing better. Fruit Division Flower Division Req 1A Req 1B Req 2 Req 3 Suppose Orange is investing in new technology that will increase each divisi investment required is $1,600,000, which will be split evenly between the ti income for each division after the investment is made. (Enter your ROI ans places, (i.e., 0.1234 should be entered as 12.34%.)) Fruit Division Flower Division ROI % % Residual Income (Loss) Req 1A Req 1B Req 2 Req 3 Determine whether both managers will support the investment. Fruit Division Manager Flower Division Manager